Getting paid on time for goods supplied or work done is critical to the success of any enterprise. So is getting the proper material to the correct location at the appropriate time. When companies trade domestically, close proximity and culture, a common credit information system and a common currency combine to make credit decisions relatively easy. But in international trade, many additional factors affect the smooth exchange of payment for goods.

The Guide to the Finance of International Trade is intended to be a simple reference source about financing international trade. You may be an importer, an exporter, a middleman, a banker, a freight forwarder or a customs broker. It is the hope that international salesmen and colleagues in the credit department will take advantage of this book to complete international deals. How often the credit manager wails about the fine mess the salesman got him into!

No matter what else you may remember from this handbook, never forget two golden rules of international trade finance: know your partner (vendor, customer, etc.) and pick your team carefully!

The building blocks of international trade finance include:
a) How buyers mitigate risks of non-performance and sellers mitigate risks of non-payment.
b) How the tools and methods discussed affect the cash flow of buyers, sellers and middlemen.
c) What resources a U.S. exporter may use to enhance competitiveness.
d) How much cash an importer needs to secure a letter of credit.
e) How an exporter can enhance negotiations by focusing on the terms of payment (especially with payment by letter of credit).

Throughout the text, italicized phrases are explained in the glossary. The handbook is written for the subscribers of the Journal of Commerce, a U.S. publication serving parties interested in international trade since 1827. The readership of the Journal of Commerce is primarily American, but there is also an international subscription. The book is written in the American vernacular.

Your comments on this publication, general inquiries from callers in the U.S. and orders for further copies of this book will be welcomed by fax at (212) 658-1911.

Download Guide to the Finance of International Trade

PDF format, 266KB, 51Pages.

Edited by Gordon Platt
HSBC Trade Services
Marine Midland Bank
The Journal of Commerce

LIST OF CONTENTS
1) Delivering reliable product to
a good customer at a fair price .............................................4
2) The contract of sale: the bottom line....................................6
3) Terms of sale .........................................................................7
4) Methods of payment ...........................................................11
5) Letter of credit
a) Definition .....................................................................14
b) Issuance cycle...............................................................15
c) Payment cycle...............................................................15
d) Transferable letter of credit..........................................19
e) Back-to-back letter of credit .........................................20
f) Standby letter of credit ................................................21
g) Assignment of proceeds ...............................................22
h) Letter of credit confirmations ......................................23
i) Sample L/C and related
S.W.I.F.T. MT700 field codes .........................................24
6) Documentary collections
a) Documents against payment ........................................27
b) Documents against acceptance ....................................28
7) Control of goods .................................................................29
8) Foreign exchange ................................................................30
9) Programs to aid exporters ...................................................32
10) Glossary of terms...............................................................33

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